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Macy’s Inc. Dives and General Electric Climbs on a Down Day for Stocks

The department store chain's results don't bode well for retailers as we head into the holiday shopping season.

Despite crossing into positive territory three times in today's session, stocks ended the day lower. The S&P 500 (SNPINDEX:^GSPC) and the Dow Jones Industrial Average(DJINDICES:^DJI) both lost 0.3%, keeping both indexes within one percentage point of where they started the year:

The consumer retailing sector weighed down the market after Macy's(NYSE:M) announced weak third-quarter results and lowered its sales growth outlook for the holiday quarter. Traditional retailers, from Wal-Mart to Target to Dollar General all fell along with Macy's. Meanwhile, General Electric(NYSE:GE) made a notable move higher as the leading percentage gainer in the Dow.

Macy's disappoints againMacy's was the largest percentage loser in the S&P 500, falling 14% after the department store chain announced surprisingly weak third-quarter earnings results this morning. Rather than marking the beginning of a rebound in comparable-store sales growth, as management had hoped, the third quarter showed worsening trends for Macy's operations: Comps shrunk by 3.6%, compared to last quarter's 1.5% drop. The retailer said spending by its domestic customers was "tepid," while international visitors pulled their spending back sharply as the U.S. dollar strengthened against many foreign currencies .

Image source: Macy's.

"We are disappointed that the pace of sales did not improve in the third quarter, as we had expected." CEO Terry Lundgren said. It's also an open question as to how the company will find consistent revenue growth -- or how long that rebound might take. Executives didn't sound a particularly optimistic note on that score, saying that they hope to return to annual comps growth of between 2% and 3% "in the years ahead." Meanwhile, Macy's will expand investments in its off-price store concept and keep trying to win more online sales.

But there's no question that this will be a tough year for the business. Management today downgraded both their top-line and bottom-line targets. The company expects sales to drop by as much as 3%, compared to the 1% loss they had forecast three months ago, and earnings should clock in at $4.25 per share, down from the $4.75 it had previously projected.

General Electric climbs to a new highIn contrast, industrial conglomerate General Electric was the Dow's biggest percentage gainer, tacking on 2% to reach a 7-year high in today's session. The stock has quietly gained 12% since GE posted its third-quarter earnings results in mid-October. The headline figures in that announcement beat Wall Street's expectations despite what management called a slow and volatile global sales environment. Yet cost cuts still produced higher profitability. In fact, GE notched its tenth straight quarter of improving operating margins.

GE's expanding margins. Source: GE investor presentation.

Investors are also optimistic about the recent Alstom energy asset purchase, which is GE's biggest acquisition to date. CEO Jeff Immelt said in a recent conference call with Wall Street analysts that the deal will boost next year's earnings while quickly establishing GE as a force in renewables and grid power. "Alstom will achieve a strong return for investors," he predicted.

Meanwhile, shareholders are expecting huge cash returns to them as a result of the spinoff of GE's consumer credit division. The company has likely raised as much as $21 billion through that process in the last month, which will help management fund a targeted $30 billion of cash returns in fiscal 2015.